Analyse the Different Ways in Which Countries Can Attempt to Overcome the ‘Basic Economic Problem’.

The free marketplace represents a superlative model of capitalism, since it denotes the most proficient and profitable way of production. In a free market, economic actors are capable of conducting business devoid of political interferences, such as the burden of a minimum wage, or trade in tariffs. Without these limits, economic actors are abridged to a state of clean competition, driving costs downstairs and resulting in senior quality and lower price products.

Free-market and Command economy are the two-major economy system. It has sparked years of controversies among individuals over which system is better. However, no agreement has been reached. Meanwhile, it is obvious that free-market economy predominates all around the world as the majority of countries are following an economy which free-market process the dominating position.

The free enterprise system uses a thing called gross domestic product, which is the value of all goods and services produced in a country in a given year. When value comes into play it is based on the utility, which is the usefulness of the product and the scarcity, which is the limited availability of it. Value today is not what it used to be like many years ago. People are not realizing it, but there is a big problem that is only going to get worst. Which is that the people's wants are unlimited while material is scarce.

As Milton Friedman once said, “Freedom is a rare and delicate plant. Our minds tell us and history confirms that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power and political hands, it is also a threat to freedom.” Friedman’s “Capitalism and Freedom” takes us into the mind of an economic genius and shows us his beliefs in a free market and the threat it presents to a dictatorship. Friedman, clearly a supporter of the free market, gives examples to show how a free market can aid a society in striving for success, becoming more dominant, and becoming more powerful. Though, at times he does show how a free market has disadvantages and he makes us aware as to how it can aid people in gaining individualism, knowledge, and overall improving a society. A free market is one that the price of a good or service is determined by supply and demand, in theory, rather than by government regulation. Milton’s thoughts and theory is that through a robust free market with political freedom, economic freedom will follow. Showing how economic freedom is a crucial toward the success of political freedom, Friedman’s theory of a free market and the Do Nothing Principle are major themes throughout his book.

“We know that in our free market economy some will prosper more than others. What we don’t accept is the idea that some folks won’t even get a chance” - Julian Castro. Market economies exist all over the world. Although there are no pure market economies, there are economies that are close to being a pure market economy. Market economies are more individualistic, and have little government involvement. First of all, it is a very individualistic economy, it’s very “every man for himself”. It benefits those who are stronger and more able to make money, and is disadvantageous to those who struggle to make money. Secondly, there are not really any government programs to help those who need it. And finally, in market economies, there are more privately

The definition of what a free market is, is a market economy based on the supply and on the demand of or with very little government control. A free market is where buyers and the sellers are able to go and buy and transact freely based on mutual agreement that they have made on the price of what the state intervention of takes subsides or is regulated.

Businesses can decide which goods to produce and in what quantity and consumers can decide what they want to purchase and at what price. The role of the state is limited to ensure right precision in the prices charged by the sellers. Prices also have the function to allocate and distribute a country’s resources. Market leads to complete effectiveness bringing about the best possible distribution of a country’s resources in a perfect world. This would only happen in a state of equilibrium and there is a unique price for every commodity. But in a realistic world which is imperfect by nature, prices are never at equilibrium and very unstable depending upon the vagaries of the market forces. This generally harms people living below the poverty line. It is impossible for them to pay high prices in cases of demand shortage. Thus, the free market model is not a viable option in developing countries which has a large number of poor. Besides, producers are aim to minimize profit and maximize rent of production. Examples of countries that are using this economy system are Hong Kong, USA, and UK. Many developing countries like India and China are moving towards totally free-market economy.

Shleifer discusses the success of the free market economic policies in his paper. He talks about the wonders the policies have done to the economies of Eastern Europe, Latin America, and China. In Eastern Europe, after the fall of the Soviet Union, governments there enacted smaller government budgets and smaller taxes. These policies have works to reverse the negative economic trend of the Soviet era, and turned into positive economic growth. In Chili, the policies their have allowed for a massive economic growth, and an overtaking of Argentina. The government in Chile also has ambitions, such as entering the economic playing field of Australia or New Zealand “Such talk might be ambitious, but it shows where free market policies got the Chileans” (CITATION). China is a massive economic success. The policies their brought hundreds of millions of people out of poverty and changed the world. Yet many people argue as to how this happened. Shleifer talks about how some people say it was the state

Free market policies would also amputates any needless regulations such as quotas, tariffs, or unnecessary boundaries on corporations. In turn, production costs of goods and services are now reduced since money that would have gone to satisfying these regulations can now be supplied into the business. Now firms are able to afford to provide more of the same product at a lower cost for consumers, with extra revenue to improve production or even wages of the workers. These workers will then, in turn, have a larger amount of money to utilize to buy products now offered at a lower rate improving not one, but multiple businesses.

The Free Enterprise system is a type of economy where products, prices, and services are determined by the market instead of being determined the government. Free enterprise refers to an economy where a businesses is free from the government’s control. There are five main principles of the Free Enterprise System. These five parts are, the freedom to choose our businesses, the right to private property, the profit motive, competition, and consumer sovereignty.

There are three main economies in the world today, market economies, traditional economies, and command economies. Comparing these three economies shows the major differences between them. Each one has its own advantages and disadvantages. They all have different ideas about who controls and owns all resources. They all have very good ideas and maybe some areas that need

The basic economic problem refers to a situation where human wants are unlimited while human resources are finite; it is the economic problem of scarcity of resources. At any one particular time, the resources of the earth are capable of producing a limited number of goods and services, however, human wants exceed limited production possibilities and this gives rise to what is known as the economic problem of scarcity.

The fundamental economic problem is related to the issue of scarcity. Scarcity means that resources are limited and short in supply in the world (e.g. diamond). Because of limited resources and unlimited demands, society needs to decide how much to produce and distribute these relatively scarce resources. The basic economic problem can be define as what to produce, how much to produce and for whom to produce.

Part 1 Scarcity When humans moved from hunter/gatherer societies to villages and then cities, a division of labor occurred. Some people became producers of food, some processors, some the ancillary goods and services that are necessary for humans to live together. They found that sometimes there was a surplus of goods, and sometimes a lack of goods. This lack of goods is called the scarcity principle, and it is the fundamental economic principle of needing (or wanting) goods in a world that has limited resources. It means that in society, there will almost always be situations in which there are insufficient resources to fulfill all human wants and needs. Of course this also implies that at any given time, not all individual or group goals can be provided, which results in tradeoffs and substitutions.

The nature and study of economics is ultimately about trying to solve the economic problem. The economics problem, put simply is a about trying to satisfy unlimited wants, with limited resources - scarcity. Due to the fact society has become more materialistic, societies wants are never-ending. When one want is satisfied, another one comes along. All these wants cannot be simultaneously satisfied as resources are scarce and limited, unlike the wants. Individuals cannot obtain a satisfactory amount of capital and consumer goods, because their desires are never ending. For example, wants include, cars, clothes, phones, holidays and shoes. The economic problem affects lower income individuals compared to ones that earn higher incomes as they may possess the resources to satisfy more wants at once. The concept of scarcity is at the core of economics. The effects that the economic problem has on all levels of society are detrimental and can only be solved by obtaining more resources.